Fear itself follows Obama into office with market plunge

NY Times:

As Barack Obama stepped into the presidency on Tuesday, Wall Street walked back to the brink.

Despite widespread optimism about Mr. Obama and a jubilant inaugural celebration, the major indexes plunged more than 4 percent on Tuesday, with the Dow slipping below 8,000, as new fears about the stability of America’s biggest banks roiled the markets.

Stocks started the day lower, fell more than 60 points during Mr. Obama’s address from the Capitol, and deepened their losses during the last hour of trading in a broad sell-off that dragged down leading financial companies by double digits. It was shaping up to be Wall Street’s worst Inauguration Day since 1900, according to JPMorgan Chase.

“It’s ugly,” said James W. Paulsen, chief investment officer at Wells Capital Management. “It’s got all the makings of the late November panic.”

At the close, the Dow Jones industrial average was down 332.13 points or 4 percent, to 7,949.09, while the broader Standard & Poor’s 500-stock index was down 5.2 percent or 44.90 points to 805.22. The technology-heavy Nasdaq composite declined 5.7 percent, or 88.47 points, to 1,440.86.

...

The Times did not compare these losses to other inauguration day losses, but in 9 of 13 trading days on inaugurations since 1941 there have been losses. I am not sure why they cut off their historical summary there, but it could be that FDR's first inaugural did better.

Some analyst might say the market did not like what Obama was saying but some of the losses must have anticipated the speech too.

You have to do the math yourself but this Wall Street Journal story suggest that Obama's inauguration produced the worst market decline of any inauguration day in history. In fact the Obama decline was almost twice as much as the previous record holder, Ronald Reagan's 1981. Ironically, Reagan's 1985 inaugural produced the largest gain.

technorati tags:
political news | news | world news
More at: News 2 Cromley